What's going on?
UK regulators said on Tuesday that media mogul Rupert Murdoch’s 21st Century Fox was unlikely to get the green light for its $16 billion bid to buy European media giant Sky – but that’s not the end of it…
What does this mean?
For years now, Rupert Murdoch has hankered after full ownership of Sky, a British-headquartered telecoms company which pioneered satellite TV in the country. Back in 2016, Murdoch launched a bid to buy the whole shebang via his firm 21st Century Fox (which already owns 39%).
The UK’s competition regulator, however, reckons that Murdoch’s family would have too large an influence on British media if Fox owned all of Sky. It’s therefore made clear that it’s unlikely to give the deal its blessing in its current form – but it did leave the door open for Disney to eventually acquire all of Sky.
Why should I care?
The bigger picture: Regulatory approval is central to this intercontinental saga.
Disney agreed back in December to buy a $66 billion chunk of Fox – including its 39% stake in Sky. The UK regulator said it would be more amenable to a buyout of the remaining bits of Sky once that deal was finalized, which is a heavy hint that it would give the green light to Disney. But the Disney/Fox deal has to first get past US regulators, who could block it on the grounds that it diminishes the competitiveness of the US media industry.
For markets: Shares of Sky jumped around 2% on Tuesday.
Since the issues surround Murdoch controlling too much of the UK media, the regulator is unlikely to oppose Sky being sold to Disney. The uptick in Sky’s shares on Tuesday likely reflected this more optimistic view that a deal will, eventually, get done – and that Disney will pay Sky’s investors a nice premium for the privilege.